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tv   Nightly Business Report  PBS  September 26, 2012 6:30pm-7:00pm PDT

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>> this is n.b.r. >> tom: good evening. i'm tom hudson. susie is off tonight. new home sales cooled a little this summer but prices jump to their highest level since the recession. radio shack sacks its c.e.o., promising to move in a new direction. but how does a niche player find its footing between the big box retailers and online competitors? and paying for college. the confusing and complex business of figuring out financial aid. that and more tonight on "n.b.r."!
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a silver lining today in some so-so economic news. the commerce department says sales of new homes slipped slightly in august compared to july. but, year over year new home sales were up nearly 28%. the northeast saw the most robust action, but sales dropped in the south. in the midwest builders say consumers are scrambling to build before mortgage rates and land prices increase. diane eastabrook has more. >> reporter: oakley home builders didn't have a buyer when construction started last spring on this three story spec house in tony hinsdale, illinois. >> this is the great room, this is the family room. >> reporter: but builder steve subkowiak says a buyer snatched up the $1.5 million home long before workers painted the walls and began installing fixtures. the new owners move in next month. >> i think a lot of people are looking at interest rates and land costs and saying hey if i want to buy a new house this is a great time. >> reporter: with historically low mortgage rates, business is beginning to boom for many home
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builders. the government says in august americans purchased new homes at a seasonally adjusted rate of 373,000. that was down slightly from july, but up nearly 28% from august of last year. subkowiak thinks many buyers were hoarding cash during the recession and are now eager to spend it on new homes on signs the overall economy is improving. but that increased demand has brought more competition for lots. >> now you have end users who are buying for themselves, you have other builders who are doing spec homes, so lot prices have gone up significantly in the last ten months. >> reporter: new home prices are also rising. the commerce department said last month alone they were up more than 11%. but while this is all good news for an economy that hasn't had much of it lately, morningstar economist robert johnson says the market still has to make up a lot of lost ground. >> if you look at housing starts at the peak we were over two million starts.
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i'd say based on population the number should have been about a million and a half. now we're down around 750,000 in terms of housing starts so we're kind of half of what i view as normal. >> reporter: one wild card for builders is the ongoing uncertainty about the bush tax cuts. subkowiak says if those tax cuts aren't extended some potential buyers could put a hold on buying a new house. diane eastabrook, "n.b.r.," hinsdale, illinois. >> tom: we saw two discouraging reports today from the c-suite, from top corporate executives. in separate surveys, both chief executive officers and chief financial officers are losing optimism. and both have dialed back hiring expectations. this stands in contrast to a report just yesterday from the conference board indicating consumers are more hopeful about their job prospects. the "deloitte c.f.o. signals survey," which tracks companies with revenues of at least $5 billion, found somber expectations for growth in sales, earnings, capital expenditures and hiring, all
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falling to a ten-quarter low. and roughly a quarter of the c.f.o.'s polled say their biggest worry is the upcoming fiscal cliff: >> some thrding about where things really are going, so they can set strategy and execute that strategy. we're going to be stuck in this for a while. as for the c.e.o. survey from the business roundtable, the chief executives point to the coming fiscal cliff and the potential impact from higher taxes and government spending cuts. chairman of the business roundtable, boeing c.e.o. jim mcnerney said the uncertainty is "cold water on long-term planing." >> reporter: i'm erika miller in new york. still ahead, i'll look at how the outcome of the presidential election could impact gold prices. i'll interview gold trader anthony neglia. >> tom: european markets tumbled as greek workers called a 24 hour strike to protest new
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austerity measures. over 50,000 people gathered to protest new salary and pension cuts, near the parliament building in athens, and some of the protests erupted into violence. on wall street: the dow fell 44 points, the nasdaq lost 24, and the s&p down eight points. >> tom: radio shack shook up its executive ranks today, as the troubled retailer looks to survive in an increasingly crowded market place. >> for the first time ever save $5 on our original pocket realistic weather radio, now on sale at radio shack stores only $10.95. >> tom: today, weather is a just a click away on a smart-phone. after little more than a year as c.e.o., james gooch is out, leaving the company and giving up his seat on radio shack's board of directors. the decision was called mutual. ruben ramirez reports on what's next for the shack. >> reporter: if a company's
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share price is a barometer of the c.e.o.'s performance then it should come as no surprise that the board of electronics retailer radioshack gave its c.e.o. the boot today. after just a little more than a year on the job, c.e.o. james gooch is out. he's being replaced on an interim basis by the company's c.f.o. dorvin lively. >> i almost feel like he's a bit of a scapegoat because at the end of the day all he was doing was continuing the strategies of his predecessor and mentor julian day. on the other hand he did make some mistakes himself. >> reporter: one of those mistakes which may have hurt his credibility with wall street, when the company doubled it's quarterly dividend just to suspend it a few months later. since gooch took over the c.e.o. spot, shares of radioshack have taken a big hit, down about 80%. in a statement the company said: "the board decided that the timing was right. moving forward with the decision sooner rather than later will help establish the right leadership to address the company's challenges."
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but with the crucial holiday shopping season right around the corner analyst chukumba says the departure's timing was surprising. the retailer which was once a favorite of electronics enthusiasts, has focused in recent years on selling low- margin cell phone calling plans and smartphones. >> while the big wireless carriers like t-mobile have their own stores, most mobile sales come from third party retailers like radioshack and best buy. >> putting other products into the stores that they can attach to wireless so for example instead of just going into buy an iphone, but also buy the protective case. maybe the bluetooth headset. accessories generate significantly higher gross margins than phones themselves. >> reporter: a turnaround plan might also include closing some of its 7,200 stores. >> at the end of the day, i don't think radio shack is irreparably broken, but you need
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to have the right c.e.o. in place and they've got to have a very compelling turnaround plan. they've got to do a great job executing that. >> reporter: radioshack says its board is conducting a search for a successor and is not ruling out internal candidates. but, analysts say looking internally didn't work out so well last time around, and what the company really needs is a turnaround expert with consumer electronics experience who can hit the ground running. ruben ramirez, "n.b.r.," new york. >> tom: another troubled retailer, barnes and nobles, introduced it's latest electronic book devices: the nook h.d., and h.d. plus. it's the first tablet designed to have more than one user. each with their own preferences and home pages. prices start at $200 dollars, beyond just books, barnes and noble will role out nook video later this fall. that's its digital download service offering movies and tv shows for rent.
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>> tom: americans with health insurance increased their spending on health care last year, as prices for all kinds of health services increased. a review of six billion private health insurance claims finds we spent an average of just over $4,500 per person, up 4.6% from the year before for the fastest growth rate in three years. david newman is the executive director of the health care cost institute, the source of the study. so david, it was higher prices, not necessarily that we were using more health care
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services that drove that increase, is that right? >> that is correct. >> tom: so with that in mind, why, if demand hasn't moved, are prices moving higher? >> we really don't know why prices are going up. but they are going up rapidly. and when prices go up, total spending goes up. >> tom: you found, in fact, that the fastest spending increases were amongst the youngest patients, that seems counterintuitive, because usually we're spending more on heche as we get older and our bodies breakdown. >> yes, and this is of particular concern because if our expectations over the long run, bend that long run cost curve, if kids are at all ages more expensive, this is going to be very difficult. >> tom: so what kind of speculation might you have about why the faster increase that we're seeing on spending with the youngest patients? >> well, we don't speculate, but we do have some evidence
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having looked at these claims, and some of the fastest growth is in mental health services and in prescription drugs. i should note that even though spending is going up, in some cases spending is good, if these kids are getting better services or more appropriate care, that would be good to see. >> tom: so in other words more spending young under life may retard future spending gr as the kids get older if they're dealing with certain maladies, right? >> that's potentially the case. we do know that kids that are sick early in age continue to be sick throughout their lives. >> tom: this is looking at and we've been talking about spending by the health care consumer. what data have you found about spending by health insurance koits, in other words are there spending increases in line with what consumers are spending more on? >> over the last two years, the relative share of spending between both the insurer and the insured has been going up.
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but their shares have been relatively constant. insured are paying about 16.2% of all dollars. >> tom: of considers all this happens with the elephant in the room being the affordable care act, the so-called obama care. this data comes in as this act continues to take effect as well as take shape. among the goals is to bend the cost curve, but at least initially seems like that cost curve is getting steeper. >> i think one of the things to keep in mind is that the affordable care act, most of the provisions come into play in 2014. >> tom: so lots of years to go there. we do have to note that you're talking to us despite the fact you're feeling under the weather yourself so, we'll let you go see the doctor tonight. david newman works the health care cost institute. >> tom: all this week, we've been looking at the view of the presidential election, from the trading pits. tonight "politics and the pits"
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takes us to gold. here's erika miller with trader anthony neglia. >> what happened to the price of gold if obama is reelected. >> if obama remains in office i believe a throft same policys will be put in place, interest rates will remain low until 2016, and i meef that the quantitative easing is going to have to play a large part in getting our economy off the ground, so i definitely think it's going to have an adverse effect on gold prices and equity prices as well. >> on the flip side, what happens if romney is victorious? >> if romney gets in you might get a little bit of a pullback just from a psych lodge cold standpoint, but he's still going to have his work cut out for him to try and get this economy up and going. so if he keeps some of the policies in place that obama has kept in, i. e. low interest rates until 2015, fed funds at a quarter percent, if he does something like that that might still give a little buoyancy to the gold price going forward, at least into
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the first quarter of 2013. >> what happens after the election? where does gold take out direction, will it be from politics and the possibility of falling off the fiscal cliff or will it be from economics namely u.s. economic data and the you're row crisis? >> combined, globally right now, we have quantitative easing, okay, we have a lot of promises without any action, okay. so the promises gave us let's call it a $100 rally at least in gold. the action i do believe will double that, okay, and give us at least another $100 plus. >> what would it take to see a major selloff in gold? >> major pullback in goal prices would probably be rise in interest rates which i don't believe we're going to see. the market is very crowded at a price point, let's call the price point $2,000, you might have some reasonable profit taking up there. >> anthony neglia, thank you very much. >> very nice to meet you.
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>> tom: the major u.s. stock indices continued lower for the third straight session, but with smaller losses than yesterday. the s&p 500 spent the entire session in the red, hitting its lowest level of the day in the hour the new home sales data was released, slowing a small slowdown in august. the index finished lower by 0.6%. trading volume was 738 million shares on the big board. 1.74 billion on the nasdaq. the energy sector powered today's selling, down 0.9%. technology and financial sectors continued lower, down 0.8% and 0.7% respectively.
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as market excitement has died down over the latest federal reserve effort to stimulate the economy, oil prices have cooled off. oil fell below $90 per barrel for the first time since early august. in the latest week, the amount of foreign oil imported into the u.s. was down to its lowest level since december. and refineries cut back, fueling concerns about weaker demand. big energy stocks exxon and chevron both fell about 0.5%. they both traded at multi-year highs just last week. the worries about global energy demand have hit the energy service providers. halliburton was down 2.4% today, and its off more than 9% in less than two weeks. discouraging comments from electronics contractor jabil circuit weighed on the tech sector. late yesterday, the company reported disappointing results, blamed on weak demand in most of its businesses. shares fell 9.9%; volume jumped more than five times as the
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stock closed at its lowest price since july. shares haven't seen much of a halo effect in recent weeks despite the contract work it does for some apple products. homebuilding stocks hd been on a tear as home sales and prices have been stabilizing, and increasing in some cases. but there was some profit taking today with the small month over month drop in august new home sales. lennar was down 4.5%, pulte group fell 4.67, and the ryland group dropped 5.7%. volume was heavier than usual in all of them. thor industries may be a different kind of home buyer to watch tomorrow. thor makes r.v.'s, and business has been picking up. after the close it reported a doubled digit jump in both sales and earnings. after closing up a half percent, shares jumped 10.5% more in extended hours trading. if that holds, shares could see $38 per share, and that would be a five-year high. greeting card company received its own greeting today, a buyout offer from a group led by its c.e.o. and including members of the founding family.
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the offer lifted shares 17.3% on heavy volume today. the offer is $17%.18 above tonight's closing price. american greetings has seen online greeting cards and social networking websites cut into it business. as farmers are bringing in the 2012 crop, better than expected harvests are pushing down grain futures. corn and soybeans are both near three month lows. traders and funds have been selling as harvests are increasing supplies more than expected, especially compared to this summer during the height of the drought. four of the five most actively traded exchange traded products were down. the s&p 500 volatility note was up 3.5% moving in opposite direction of the broad market. and that's tonight's "market focus."
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>> tom: the world's largest reserves of coal are right here in the u.s. but our own tepid economy, as well as slowing in europe and china have hurt demand, bringing down prices and profits for miners as they face new environmental regulations. we spoke with hal quinn, c.e.o. of the national mining association, and began by asking him where are the opportunities for u.s. coal? >> when you think about the steady march of the doling world toward building modern and more prosperous societies, globally, the need is just extraordinary both in terms of thermal coal for electricity, the fasters growing fuel for the last decade and will continue to be, and then for building out the urban centers. we're going through a hyper urbanization stage globally,
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so you need steel and steel requires iron ore which requires coal. so long-term fundamentals are very compelling. >> tom: talk to bus the infrastructure that's necessary in ud to get american coaling overseas to feed those emerges markets. is that infrastructure in place today? >> well, it's in place in the east coast and on the gulf coast and we're trying to and have a number of proposals to build out that infrastructure on the west coast, which will be opening up the asian markets through our western coal. asia and other countries increased their demand, also opens up opportunities in our traditional markets such as in europe. >> tom: i want to ask about demand here in the united states, because natural gas prices have been very low for quite some period of time thanks to new drilling techniques that have led to an abundance of natural gas. how high are natural gas prices have to go in order for
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your industry, the coal miners, to begin to see a pickup in demand domestically? >> well, when we see gas get back to the $3 range, coal will be back in money in terms of dispatching the electricity market. i think it's public policys that don't allow us to compete and we're starting to see what we believe are bad public policys that are going to carry bad chemical weaponss for american business and american consumers. >> tom: i want to ask you about one of those, an e. p. a. rule that would require plants built after april 2013, power plants, to have carbon capture technology. what kind of impact may that have on coal demand there after? >> well, tom, that is a policy that says we're not going to invest in the future of coal and future of clean coal technology, because if you're going to require something tomorrow to be built with the technology that may not be commercially proven both on a
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technical and economic standpoint for another 10 to a years you're basically putting a moratorium on building out our electric fleet with more modern coal plant. >> tom: let me understand your critique of this e. p. after proposal for these new carbon capture technology. is it the cost of the neck nothing? >> there has not been a fully integrated plant dreamed state and we need time to do that, which is fully demonstrating both on the capture side of the carbon and in terms of the transportation side of the carbon dioxide, and then the sequestration or storage of that carbon die october side. >> tom: hall quinn of the national mining association. >> tom: tomorrow, more from mine-expo in las vegas. we talk with phil baker, the c.e.o. of silver miner, hecla mining. >> tom: next year's college
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graduates are on pace to enter the job market with an average of about $28,000 in student debt. rising debt levels are driving a push to help students understand the true cost of college before their first day of class. over the past year, students have gotten some new tools available to help them figure out those costs before signing up for school. but, as sylvia hall reports, there's still some important information that's not easy to find. >> reporter: in business, it's rare to make a decision without weighing all the costs first. but when high school students apply to college, it's hard to make such an analysis. this year, it gets a little easier. some colleges will start using the consumer financial protection bureau's uniform shopping sheet, and all college websites are required to have tools to help students estimate the actual cost of college. financial aid experts say all these new tools-- and the attention around them have started a conversation. >> i think it's increased awareness across the higher education front about the need to provide useful and adequate information to students. >> reporter: the idea is to help students ballpark their expected college cost, and the amount of debt they could take on to earn
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a degree. but the information isn't always complete, and could add more confusion to a process that's already too complicated. >> students and parents probably have too much information. there's so much information out there it's hard for them to focus on what's really important in helping them make the right decisions. so a lot of the conversation is about new disclosures, part of the conversation has to be about streamlining the current disclosures. >> reporter: draeger showed us this book of all the things colleges and universities have to disclose to potential students. while a lot of this information explains what college will cost. consultant mark schneider says that's only half of what families should know. >> the information about wages, which is for me is the ultimate validation of the value of the degree, which is the ultimate consumer information that students need before making these decisions is not in that giant fat book. >> reporter: schneider works with six states to link up college graduation information with government wage and employment data. the goal is to find the job and income prospects of each degree at each school in the state.
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he says this research is possible in many states across the country...but right now, it's just not happening on a large scale. >> the level of data that citizens need, that parents need, that students need, that taxpayers need, that everybody needs, is what happens to a student graduating from a particular program from a particular university, because that's where we have so much variation and students should know that. >> reporter: schneider says he hopes eventually, the cost and the financial benefit of each degree from each college, will be at consumers' fingertips. but he says right now, the projects need financing and political will to expand. sylvia hall, "n.b.r.," washington. >> tom: finally tonight, a sea- change for fidelity investments: stock funds no longer rule its portfolio. the money management firm today said that bond and money market funds now make up more than half of the company's $1.6 trillion in assets under management. that's almost $850 billion. it's a major turn for fidelity. the firm built its fortune on stock funds back in the
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nineteen-eighties and nineties. the change comes as investors fled stocks following the financial crisis and great recession. >> tom: that's "nightly business report" for wednesday, september 26. good night everyone. we'll see you online at: and back here tomorrow night. "nightly business report" is brought to you by: captioning sponsored by wpbt captioned by media access group at wgbh
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